Koitaki Plantations Ltd v Charlton Ltd

• Jurisdiction: Papua New Guinea
• Judge: Kandakasi, J
• Judgment Date: 11 July 2014
• Citation: (2014) N5656
• Court: National Court
• Year: 2014
• Judgement Number: N5656

Full : WS. NO. 1276 of 2014; Koitaki Plantations Ltd v Charlton Limited trading as Kookabura Meats and Stuart Fancy (2014) N5656

National Court: Kandakasi, J

Judgment Delivered: 11th July 2014

N5656

[PAPUA NEW GUINEA

[IN THE NATIONAL COURT OF JUSTICE]

WS. NO. 1276 of 2014

BETWEEN

KOITAKI PLANTATIONS LTD

Plaintiff

AND

CHARLTON LIMITED trading as KOOKABURA MEATS

First Defendant

AND

STUART FANCY

Second Defendant

Waigani: Kandakasi, J.

2014: 6th March

11th July

MEDIATION – Bad faith - Parties duties and responsibilities - Breach of - Consequences for bad faith - Deliberate refusal to comply with consent orders for mediation - Effect of - Deliberate disobedience of court order - Contempt of court - Refusal to appreciate imperative to use mediation to resolve disputes - No good reason or explanation offered - Case not falling in inappropriate cases for mediation - No meritorious issue warranting only judicial consideration and determination presented in terms of case being inappropriate for mediation - Effect of orders for mediation - No meritorious issue for judicial consideration and determination - Sanctions for bad faith - Consideration of - Court can impose sanctions including orders dismissing proceedings signing judgment against defaulting party.

Papua New Guinea cases cited:

Abel Constructions Ltd v. W.R. Carpenter (PNG) Ltd (2014) N5636

Hargy Oil Palm Ltd v. Ewasse Landowners Association Inc (2013) N5441

PNG Ports Corporation Ltd v. Canopus No 71 Ltd (2010) N4288

Superannuation Fund Board v. Sailas Imanakuan (2001) SC677

Mark Ankama v. Papua New Guinea Electricity Commission (2002) N2362

NCDC v. Yama Security Services Pty Ltd (2003) SC707

PNG Power Ltd v. Ian Augerea (2013) SC1245

Kalang Advertising Limited v. Visvanathan Kuppusamy (2008) SC924

Geoffrey R.E. Vaki v. Gari Baki & Ors (2014) N5612

Overseas cases cited:

Breffny Investments Pty Ltd v. Clean Space Australia Pty Ltd [2011] QCATA 63.

Real Bank Inc. v. Samsung Mabuhay Corporation GR N. 175862.

Calalang v. Court of Appeals G.R. No. 103185.

Bank of the Philippines Islands v. Court of Appeals 362 Phil (1999)

Harrelson v. Hensley 891 So2d 635.

Hernando County School Board v. Nazar 920 So2d 794.

Re A.T. Reynolds & Sons, Inc., 452 B.R. 374 (S.D.N.Y. 2011).

Kerestan v. Merck & Co. Long Term Disability Plan, 2008 U.S. Dist. LEXIS 50166 (S.D.N.Y. July 2, 2008).

O'Donnell v. Pennsylvania Department of Corrections, 2011 U.S. Dist. LEXIS 11438, 818 (M.D. Pa. Feb. 4, 2011).

Other sources cited:

"Saying an 'An Ounce of Prevention is Worth a Pound of Remedy', Secretary General" UN General Assembly GA/11242 (found at http:www.un.org/News/Press/docs/2012/ga11242.doc.htm

EU Directive 2008/52/EC on certain aspects on civil and administrative matters (reference in http:www.kennedys-law.com/article/mediationineurope.

"'Mandatory' Mediation: LC Paper No. CB(2)1574/01-02(01).

Developing A System of Court Annexed ADR In An Ever Increasing Litigious Society, Arguments For and Against: The PNG Experience, Malayan Law Journal: Article Supplement, LexisNexis, 2007.

http://www.lexology.com/library/detail.aspx?g=c6ac59b9-043b-48be-bcc5-5ac07f1bddaa.

Counsel:

A. Warokra ,for the Plaintiff/Cross-Defendant

M. Nale, for the Defendant/Cross-Claimant.

11th July, 2014

1. KANDAKASI J: This is one out of four matters in which a single question has arisen before me for the first time under r.10 (7) of the Rules Relating to the Accreditation, Regulation, and Conduct of Mediators promulgated on 30th March 2010 (the ADR Rules).

Question

2. The question is this. What is an appropriate sanction for a party deliberately refusing to participate in court ordered mediation and therefore acting in “bad faith”?

Background

3. The background to the question presented is this. By consent of the parties, the Court made an order for this matter to go to mediation to be facilitated by an accredited mediator. Given that the parties were financially able to meet an external mediators fees, the Court ordered mediation to be conducted by an accredited external mediator. This required amongst others, the parties meeting in equal proportions the mediators professional fees and all the other terms of the order.

4. Charlton Ltd trading as Kookabura Meats and Stuart Fancy, the first and second defendants respectively (the Defendants), paid their share of the agreed mediators fees and turned up for mediation on the date set for the commencement of mediation, which was 23rd September 2013. On the other hand however, Koitaki Plantations (Koitaki) deliberately decided against the Court ordered mediation. Based on that decision, it decided not to pay its share of the agreed mediators fees. Then on the appointed date, the mediator and the Defendants turned up for mediation but Koitaki did not. This led to the mediator issuing a certificate of “bad faith” in Form 1 of the ADR Rules.

The legal position

5. As I noted in my decision in Abel Constructions Ltd v. W.R. Carpenter (PNG) Ltd,

(2014) N5636, delivered on 18th June 2014.

1 the PNG Judiciary is not alone in the promotion of the use of mediation. Instead, it is a part of a worldwide movement. The movement started in the United States of America in the 1970s with followings in the United Kingdom and Australia in the 1980s. Eventually, as late as 23rd May 2012, the United Nations, through its General Secretary, Ban Ki-moon, issued a circular asking member states to embrace and use mediation as a preferred form of conflict resolution.

"Saying an 'An Ounce of Prevention is Worth a Pound of Remedy', Secretary General" UN General Assembly GA/11242 (found at http:www.un.org/News/Press/docs/2012/ga11242.doc.htm

2 Four years before that, on 13th June 2008, the European Union issued a directive in similar terms.

EU Directive 2008/52/EC on certain aspects on civil and administrative matters (reference in http:www.kennedys-law.com/article/mediationineurope.

3 Following the EU directive, Italy enacted legislation for compulsory mediation before litigation. Canada allows filing before mediation but requires mediation before trial.

"'Mandatory' Mediation: LC Paper No. CB(2)1574/01-02(01).

4 Recently, in 2011, Australia past its Civil Procedure Act 2011, requiring litigants to attempt to resolve their disputes through mediation first before litigation.

6. The objective behind this movement, as I noted in Hargy Oil Palm Ltd v. Ewasse Landowners Association Inc

(2013) N5441.

5 was to:

· reduce delay and backlog of cases;

· assist in the management of cases;

· reduce costs to the parties, the Court and government and taxpayers;

· meet the needs of the parties;

· produce fair and equitable outcomes in all the circumstances;

· achieve party satisfaction;

· produce enduring agreements;

· preserve ongoing relationships;

· protect interests of vulnerable third parties;

· preserve and increase party confidence in the justice system;

· encourage parties to use ADR, especially mediation again;

· achieve moral education;

· educate, encourage, respond to and meet the needs of the legal profession; and

· change legal cultures from one of being adversarial to working collaboratively and arrive at lasting solutions.

7. A very serious and ever increasing problem of backlogs in the formal courts' lists forced this movement. Many people involved in disputes either deliberately deciding not to or simply neglecting to reason with their opponents and have their disputes resolved, contributed significantly to that problem. This, in the world’s most recent history, saw many people turning to the formal court system for a resolution of their disputes. Sadly however,

As I noted in my article Developing A System of Court Annexed ADR In An Ever Increasing Litigious Society, Arguments For and Against: The PNG Experience, Malayan Law Journal: Article Supplement, LexisNexis, 2007.

6 the courts resources are very limited and they can do only so much, in terms of the need to dispose of the cases efficiently and effectively in a timely and less costly manner. Consequently, a vast majority of the cases joined the ever increasing list of pending cases thereby causing serious backlogs in the formal courts' list.

8. Even after the introduction of ADR and mediation. The serious problem of delays and backlogs have not gone away. A number of factors contribute to this problem. But one of the main factors is again, the parties’ failure to enter into fair frank and open discussions of the matters in dispute between them and jointly explore options to resolving their dispute and resolve them. This is so despite provisions being made in a number of legislation and elsewhere both internationally and locally which encourage the parties to have their disputes resolved out of court.

9. In either deliberately or inadvertently failing to use mediation, litigants seem not to appreciate the benefits of using mediation, which can be summarized in terms of mediation:

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